BUSINESS The Recovery Speeds Up

Nobody doubts that Dallas is back. The question we asked is, why?

THE INCH-BY-INCH RECOVERY SEEMS TO be gaining momentum. A D Magazine survey of economists, employment specialists, and business leaders last month found unanimous agreement that Dallas has struggled out of the financial tar pits of the late ’80s. While empty eyesores still dot the skyline and shuttered buildings line some of the highways, the signs point to a heating up of the economy on all fronts:

Dallas is number one among U.S. cities in new and expanded businesses.

We top all cities in the construction of new apartments.

We’re second only to Atlanta in job creation.

Property values in Dallas County rose 4.48 percent over the first half of 1995, the second year values have risen after five dreary years of decline.

Local advertising agencies, large and small, tell us revenues and profits for the last 18 months are at an all-time high.

Local spot radio for the third and fourth quarters is at a premium, a sure sign of strong retail activity.

A, H. Belo reported a 22 percent surge in revenues for the second quarter, in pan due to increased advertising sales for The Dallas Morning News.

The Dallas area attracted 68 new companies in 1994, bringing with them a total of 4,359 employees.

Sounds good enough to make the Chamber of Commerce glow with pleasure. But if we’re coming back, as everyone agrees we are, just what is bringing us back?

Our probing on this point got us quickly ensnarled in the age-old question of the chicken and the egg. Do we feel better because the economy is better, or is the economy doing better simply because we’re feeling better? Or both? In other words, is the Recovery something that is “out there”-in objective measurements such as corporate relocations, building leases, and new Seville sales, or is it “in here”-the product, at least in part, of our own psyches?



The Objective Theory

The Recovery is “out there,” caused by immutable laws of economics.

1. If power abhors a vacuum, so does money-especially real estate money.

In the boom times, easy credit encouraged overbuilding. The first priority was to spend the construction loan; only after the building was up did it dawn on many speculators to start looking for tenants. They didn’t find many, By 1990 Dallas had more empty office space than the entire East Coast. The speculators went bankrupt, the loans went unpaid, and the banks went bust. With the air (brutally) cleared and prices at rock bottom, a new generation of real estate money has moved to fill the void. Neglected office space is being renovated and leased.

2. Market forces that were artificially suppressed are finally being unleashed.

Keith Phillips, an economist for the Federal Reserve Bank of Dallas, sees real estate as only one part of the problems we faced. “Market forces work if there are no shocks to theeconomy,” he says. “What we’ve added here is stability. First we had the collapse of the oil industry. Then the overbuilding of real estate. Then we had the defense cuts in the early ’90s. All this happened in rapid succession. Now those factors have abated so that natural economic forces, which have been stronger in Texas than the rest of the nation, can’t help but bring about growth.”

3. Ross Perot was wrong. We do live in a global village.

“The global economy is driving job growth in several manufacturing areas, in the telecommunications equipment industry, and in the service sector,” says Ray Perryman, economist-in-residence at SMU’s Cox School of Business. “In the service area jobs are high-paying, white-collar positions in fields such as architecture and high-tech consulting for companies in Mexico and other foreign countries. ” Nor should the effects of the Bust on homegrown entrepreneurs be overlooked. Unable to exercise their natural talent for making money in the barren soils of their own hometown, thousands discovered greener pastures elsewhere in the U.S. and around the world- and rediscovered why D-FW Airport is such a boon to a city located in the center of the country. “More small businesses are owned andoperated from office suites in North Dallas than anywhere else in the world,” contends one such entrepreneur, who with a staff of five oversees seven small companies, all located a one-day trip from his home.

4. We’ve invented a “user friendly” environment.

Leading the way are the energized suburbs, which are hotly pursuing new business. “Ours is a city that gets things done,” says Tom Muehlenbeck, Piano city manager “If someone wants to build a building, we do whatever we need to do. Tax incentives, inspectors on site-we make it easy for development to happen.” Their successes-J.C. Penney, Inc., for example-spur the economy of the whole region.

Also, DART has finally gotten its act together, “Mass transit brings home and work closer together, making it easier for anyone to stay employed and productive,” says Brad Stevens, president of Staffing Services, Inc., a personnel agency. Real estate broker Jerry Fults adds that the reconstruction of Central Expressway and LBJ Freeway will also contribute to an economic renaissance, especially downtown. “I live near North-Park,” he says. “Before, it was a nightmare. When the DART shortline is complete, I’ll be able to hop on a train and be downtown in 10 minutes.”

5. People who tightened their belts find it has paid off in discretionary dollars to spend, and that drives the restaurant and bar business.

“I judge the economic recover)’ by what I call the Belt Line index,” says stockbroker and business commentator (KERA, KRLD) Dave Johnson. “When I drive down Belt Line in Addison and see that no spaces are empty, I figure we’re doing pretty well.”

As you can see, these “objective” explanations leave a lot unexplained. Newly started businesses are signing leases and filling up the empty buildings, but why are they starting now? Relocations are nice, but relocated companies that bring paying jobs also bring employees in those jobs. So where’s the employment growth coming from? And why are people spending their discretionary dollars? This brings us to…



The Subjective Theory:

The Recovery is “in here,” sparked by the mysterious workings of psychological and emotional forces.

1. We’ve stopped navel-gazing and coin-plaining and gone back to doing what Dallas does best: competing.

“When you are being introspective, focusing on yourself and vour problems, you don’t have the energy to go out and compete,” says Dallas mayor Ron Kirk, He adds that we shouldn’t forget that one man’s ceiling is another man’s floor. “The thing is, we’re a young city as far as American cities go. We have very little experience with economic downturns and recovery. What looks ’down* to us is an amazing bounce back to many other cities.”

2. It’s all relative. Even some of our Have-Nots have a lot.

KRLD talk show host Jody Dean, who recently queried his listeners on their level of consumer confidence, noted “an ever-widening division between folks who are doing just fine and a growing number of people who live paycheck to paycheck.” However, Dean suspects many people may be like the caller who said he didn’t have money for groceries but admitted that he bought tickets to sporting events. “In Dallas,” says Dean, “we believe that if we don’t have the money to play, we don’t have the money to live. If there’s some excitement going on, we’ve gotta be there.”

3. More people are adapting to the fact that the cradle-to-grave job security of the past is, well, past.

We’re adjusting to a new economy in which the politician s old promise of “good jobs and good wages” has undergone some downsizing, says Brad Stevens, whose company specializes in temporary and part-time placement and what he calls “third-party staffing.” In other words, his firm hires people and rents them out to companies with specific, short-term needs. “People want full-time jobs, and they want to make more money than they did in the late ’80s,” says Stevens. “But many of them have adjusted to the notion that this won’t happen. And life goes on anyway.”

If neither theory, or any combination of both, sounds convincing we offer one last-and some say absolutely foolproof-explanation:



The Cowboys Theory

The fortunes of city and team are inextricably linked in heaven and on earth.

Nobody who’s lived in Dallas more than a decade would second-guess the eerily prophetic nature of the Dallas Cowboys’ win-loss record. When Jerry Jones bought the Cowboys in 1989, both the team and the city were in the dumper. Six seasons and two Super Bowl victories later, the team and the city have climbed back in the saddle.

“I’m not going to say you can credit us directly,” Jones says. “But I think the team is an inspiration to people. We’ve been in two Super Bowls seen by a billion people around the world, and we played 17 nationally televised games in the last two seasons. People tell us that companies looking to relocate believe they know a lot about the character of Dallas before they visit here.”

That’s about as rational an explanation for an irrational phenomenon that you’re going to get.

So if Dallas were a stock on the Big Board, would you buy? Or do you want to wait to see bow the season opener goes?

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